2023 (7) TMI 442 - HC - Companies Law

Validity of sale deed - sale of property by the company - Sale was approved by the Board of Director resolution - Locus of the third party - Seeking to relieve the petitioners wholly from the alleged acts of default and liability complained by the respondent - HELD THAT - This Court finds that the petitioners have not committed any illegality as alleged by the ROC. Further, launching the prosecution under Section 628 of the Old Companies Act is also not permissible since the complaint has been filed under Section 628 of the Companies Act, 1956 (Old Act) and the new Companies Act commenced only from 2014 onwards. Any prosecution has to be launched in accordance with the provisions of Section 448 of the new Companies Act. Therefore, no prosecution can be launched under Section 628 of the old companies Act in view of the provision repealing Section 628 of the old Companies Act and hence, this Court feels that the present complaint is not maintainable. This Court does not find any jurisdiction on the part of the respondent to prosecute the petitioners and this Court is of the prima facie view that the petitioners have not committed any offence as narrated by ROC and upon perusal it is clear that the petitioners cannot be prosecuted under Section 628 of the Old Companies Act. Therefore, all the petitioners are relieved from the prosecution - Petition disposed off.

Summary

Issues involved:
The Company Petitions seek relief from alleged acts of default and liability complained by the respondent in E.O.C.C.No.73 of 2022.

Details of the Judgment:

Issue 1: Sale of Property Dispute
The Town Benefit Fund (Kumbakonam) Limited sold a property through public auction, leading to a dispute between Mr.V.Kalyanaraman and Mr.B.Mukundaramanujam over the sale deeds. This resulted in legal proceedings including a suit and an appeal.

Issue 2: Alleged Loss Disclosure
Mr.V.Kalyanaraman filed complaints alleging the company incurred a loss due to incorrect recording of sale consideration. This led to proceedings initiated by the ROC against the petitioners for violation of Section 628 of the Companies Act, 1956.

Issue 3: Maintainability of Petition
The petitioners argued that the proceedings initiated by the ROC were not valid and sought relief under Section 463(2) of the Companies Act, 2013. The respondent contended that the petition was not maintainable under Section 463(1) of the Act.

Judgment:
The Court found that the petitioners had not committed any illegality as alleged by the ROC. It was noted that the ROC should not adjudicate private disputes, and the prosecution under Section 628 of the Old Companies Act was not permissible due to the repeal of that provision. Therefore, the petitioners were relieved from prosecution in E.O.C.C.No.73 of 2022.

The Court directed the parties to submit the order to the Additional Chief Metropolitan Magistrate, who was instructed to relieve the petitioners from the prosecution. The petitions were disposed of accordingly.